A Budget For The Few

Brian O’Boyle casts a sharp eye over Budget 2019, suggesting that beyond the headlines the government has not shifted beyond its corporate agenda.

Budget 2019 comes ten years after the start of the Great Recession. Back then, no measure was deemed too excessive, as Fianna Fáil took €12.5 billion off working people in the first year of the crisis. Successive governments eventually took more than €30 billion out of public spending, proving that when they need resources, the establishment doesn’t mess around. The government also passed emergency legislation to pump €64 billion of tax payer’s money into the six main Irish banks. Contrast this, with their response to the current problems facing Irish people. When the Minister for Finance stood up to deliver his budget last week, Pascal Donoghue confronted a record emergency in the housing sector. Fine Gael have been in office for seven years without building adequate public and affordable housing. This has left 10,000 people homeless (including 4,000 children), 140,000 on social housing waiting lists and countless others paying too much in the private market. After a decade of austerity, Ireland also comes close to the bottom of European leagues tables in terms of healthcare, childcare and environmental protection. The influential Euro-Health Consumer Index recently ranked Ireland as having among the worst outcomes for patient information, treatment and results. The most visible sign of this dysfunction is the fact that 707,000 people are currently waiting for treatment of one kind or another—the worst backlog in the history of the state. As if this isn’t bad enough, the economy isn’t providing even the basics for many people either. Figures compiled by the Central Statistics Office indicate that there are currently 800,000 people living in poverty, 250,000 of them children. In a decent society any of this would be enough to declare a national emergency, but poverty and social suffering are not the kind of crises that trouble Fine Gael. When banks are in trouble no stone is left unturned, but generations of people can be left in poverty without the government passing emergency legislation. The mood music from the Minister for Finance is instead the need to be prudent with the public finances.

Budget 2019

The biggest problem with the government’s budgetary adjustment is its lack of urgency. Fine Gael have committed €66 billion to public spending for 2019, but this is only 36% of Gross National Income, compared to an average of 46% in the European Union. In his Summer Economic Statement, Donohue also admitted that the government had €900 million extra fiscal space available, but instead of putting this into current spending he put €500 million into a ‘Rainy Day Fund’ and used the rest to pay off the national debt. This has condemned thousands of people to ongoing hardship where there needn’t be any. It also leaves Ireland as an extreme outlier in terms of spending on public services and distribution. Consider how much the country would be spending if it followed the lead of its European counterparts.

Country

Public Spending Ratio

Equivalent Expenditure Billions €

Republic of Ireland

36%

66

France

56.46%

102

Finland

54.02%

97.7

Belgium

52.2%

94.4

Denmark

52.1%

94.3

EU Average

46%

83.26

Ireland is also incredibly rich. Over the last two years the southern economy has grown at more than three times the European average, with a headline rate of 7.3% for 2017 and 8.9% predicted for 2018. The levels of wealth in the country are also historically high, with total assets now standing at €727 billion. The richest 85,000 households have an average wealth of €3.2 million each in a country with one in five children going to school hungry. More than anything else, this reveals Fine Gael’s true priorities. They claim to be a caring government but child poverty is not the outcome of a natural disaster, it is the predictable result of policies pushed by Fine Gael regardless of their consequences. A second problem with the government’s figures is that many of them can’t be trusted. Paschal Donoghue promised €2.3 billion for housing for example, but more than €2 billion of this was already allocated through the previously announced Rebuilding Ireland. This leaves just €270 million for new initiatives, with €120 million of this going directly to landlords through Housing Assistance Payments (HAP). There were similar smoke and mirrors involved in a €230 million fund for 6,000 affordable houses with just €18 million of new money being allocated for 2019. Meanwhile, landlords will also benefit from between €18 and €44 million via an increase of mortgage interest relief to 100%. In a time when rents are already 26% higher than at the height of Celtic Tiger, the government is giving landlords money for renovations that can then be used as grounds to evict tenants in rent pressure zones. Rarely has so blatant a measure been passed by a governing party on budget day.

Meanwhile, the budget spectacularly failed to address the climate chaos being created by capitalism. Last week’s IPCC report confirms what scientists have been saying for decades. We only have 12 years to reduce Co2 emissions dramatically to have any hope of averting global temperature rises of over 1.5 degrees. Despite this, the measures in the budget were completely derisory in comparison to the problem. There was €170 million promised for forestry and environmental-agricultural initiatives but even with this, Ireland remains one of the worst offenders for Co2 emissions. Figures released by the Independent Climate Change Advisory Council, show that Ireland is dangerously behind on its commitments to reduce fossil fuel consumption. In 2009, the state accepted a target of cutting its emissions to just 80% of its 2005 level by 2020. Despite this, the country is expected to reach just a 1% reduction risking fines of up to €600 million every year. They are literally fiddling while children lose their futures and the planet burns all around us.

Our Alternative

People Before Profit have far more ambition for the people living on this island. Through a series of targeted measures on the corporate sector and millionaire households our Alternative Budget—Recovery for All—showed how an extra €17 billion could be raised to dramatically improve the living standards of the people who live here. This year the banks—who created so much havoc for Irish society—will get away with an incredible €925 million in unpaid taxes. This is done through a series of loopholes that allow corporations to write off current taxes against past losses, giving bailed out banks years of tax free profits. Working people don’t have the luxury of reducing their taxes against periods of unemployment, so why should the banks get away with this tactic. Our budget would immediately close down loopholes such as this to bring in nearly €9 billion next year. Alongside this, we would tax the wealth of millionaire households at 2% (once a million euro was allowed for a family home) and increase employers Pay Related Social Insurance to move it in line with European averages. On the tax side we would scrap the Universal Social Charge for all income below €90,000 and bring in a series of higher taxes for those earning over €100,000.

The richest 5% would still have more power and privilege than the rest of us after our budgetary adjustments, but with the extra money that we collect, People Before Profit could radically transform our public services and eradicate the worst forms of poverty and deprivation.

Below we reference some of the key initiatives;

Build or buy 21,000 new public housing units to make a dent in the housing crisis.

Make public transport free to cut emissions and reduce congestion.

Invest €3 billion in healthcare, including Free GP care and €300 million in mental health.

Reduce pupil teacher ratios to 1:22 and make education free from the cradle to the grave.

End the scourge of Pay Apartheid and scrap FEMPI in the public service.

Spend €500 million on rural broadband, €93 million on rural development and €250 million on a Western Rail Corridor to reinvigorate rural Ireland.

Invest €750 million on renewable energy and €250 million on agri-environmental initiatives.

Instead of Fine Gael’s recovery for the rich, this would create one that flows to everyone in society. Taken collectively, our measures would give relief to workers struggling to make ends meet without hurting the poorest and most vulnerable. In addition, we would create state-led employment to protect workers from the potential instability of Brexit, whilst providing a safety net and social services that we can all be proud of. For all of this ambition, however, the adjustment being proposed here is hardly radical. At 46% of Gross National Income, it proposes moving the overall tax take to the European average. This should not be too much to ask, but such is the nature of tax haven Ireland that this will never be granted without mass movements on the streets and in the workplaces. Our task over the next 12 months is to participate in these movements rather than waiting for next year’s crumbs from Donoghue’s budget.